I couldn't help being immediately alerted to a huge buying opportunity as I watched Jim Cramer's Mad Money on CNBC. Jim Cramer was asked a question about the opportunities GM and GM bonds. Cramer immediately responded with a sell everything answer which resembled the "ready, shoot, aim" approach to investing. Granted, GM and Ford both have some huge problems, but often in the midst of problems lie opportunity.
A few weeks ago I mentioned the value of buying GM's GMAC preferred stock. GMAC is very strong, and our country could not allow its parent company to go out of business. But, if you listen to all the negative news reports you would think GM was going out of business next week. Don't listen to them. The sell off in GM and its debt may be one of the best buying opportunities on the entire street.
GM's entire management should be fired. These overpaid, stock option collecting suburbanites have allowed the Japanese eat their lunch, while they sit back and collect their huge salaries and cash in their stock grants. Essentially, GM has given Japan the car market, and are now stuck with Trucks and SUV's that get horrible gas milage. This being said, what do you think Kirk Kerkorian has up his sleeve with wanting a 9% stake in GM ? Well, let me speculate.
Kirk Kerkorian, the MGM visionary, was once the biggest individual shareholder of Chrysler before the company was sold to Daimler Benz to create DaimlerChrysler. Where others saw disaster, Kerkorian saw opportunity. Kerkorian is smart enough to know that GM virtually comes with the backing of the full faith and credit of the US government. If Chrysler, the #3 automaker could be bailed out with government guarantee's, what about #1? Frankly, I don't think it will come even close to the Chrysler situation, but I do feel a buyout, merger, or takeover by a Japanese (Toyota) automaker is a real posibliity. Here are a few reasons:
1) GM is one of the largest employers in the country. If the company failed, we would have massive unemployment, and quite possibily a depression.
2) Current management cannot allow the company to continue on its current course.
3) Chrysler was dying until it merged with Daimler Benz.
4) GM's auto sales are dead or dying, and Japan is trying to break into the US truck market and SUV market.
5) Kirk Kerkorian, saw opportunity in Chrysler, now he see's opportunity in GM.
The bottmline here is I smell a huge opportunity, and a possible merger with a Japanese automaker. So, what happen's to Ford if GM merges with a Japanese company ? That's a tough one.
